Hilcorp fined after closing valve designed to prevent oil spill at Prudhoe Bay

The state agency that oversees oil production in Alaska this week imposed a stiff penalty on the operator of the state’s largest oil field after a safety valve designed to prevent an oil spill in a Prudhoe Bay well was switch off.

An inspector with the Alaska Oil and Gas Conservation Commission discovered the unusable surface safety valve on September 27, a week after the well in the western Prudhoe Bay area returned to production. oil, according to documents associated with the incident.

It is not known how long the valve has been closed.

In his two page order released Tuesday, the agency fined Hilcorp Alaska $ 10,000 and said it had a “substantial history of non-compliance.” The agency said the company provided insufficient details on the situation. He questioned whether the company’s corrective actions will be effective in preventing a similar incident in the future.

Although Hilcorp notes that it conducted an internal investigation, no details were shared that would indicate a root cause for the defeated critical well (safety valve system) and how long it was defeated before being discovered by an AOGCC inspector, “the order said.

A Hilcorp official said in an emailed statement Wednesday that it undertakes thousands of operations each year and that safety and environmental protection are its top priorities.

“Upon learning of this specific incident, Hilcorp immediately launched an investigation to determine the root cause,” said Luke Miller, director of public affairs and government of Alaska. “We have procedures in place to prevent this from happening again in the future. We will continue to work closely with AOGCC to ensure compliant, safe and responsible operations. “

Commissioners were unable to comment on the matter, said Grace Salazar, a spokeswoman for the agency.

Hilcorp, a private company based in Houston, Texas known for its lean operations, has been credited with helping stabilize production from aging oil fields, most notably at Prudhoe Bay, where it took over as operator from BP last year in a $ 5.6 billion deal. But critics said the company was prone to environmental accidents, such as gas leaks at Cook Inlet in recent years.

The agency’s language about Hilcorp’s “substantial” non-compliance is reminiscent of previous heavily worded commission orders against the company prior to the acquisition of the Prudhoe Bay oil fields. The incident is the agency’s first instance of non-compliance recorded against Hilcorp this year, although it faced a slew of incidents last year, according to agency files.

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Company practices such as daily inspections should have detected the inoperable safety valve system, Hilcorp said in a one page letter to the agency, signed by Stan Golis, Director of Operations at Hilcorp Alaska.

An investigation revealed “a lack of attention” on the part of two people, the day and night operators of the H Pad, according to the November 2 letter. The incident occurred at the H-24A well.

The letter indicates that disciplinary action has been taken against the two individuals, a biennial safety valve system training is in place for platform operators and the incident has been reviewed with the Hilcorp operations team for to raise awareness.

The order said Hilcorp had not requested an informal review or hearing to address the alleged violations.

The incident is “serious” that should have been detected by normal procedures on the North Slope, said Mark Myers, former director of oil and gas for the State of Alaska and former geologist of Arco Alaska when it operated on the northern slope. in the late 1990s.

“This should be a wake-up call for Hilcorp,” he said.

The Alaska Oil and Gas Conservation Commission and Hilcorp should take a close look at the company’s training, procedures and safety culture to avoid future problems, he said.

The safety valve system was shut off when a low pressure sensing device was “defeated”, according to the order. This prevented the automatic closing of the surface safety valve.

‘Broken’ means the safety valve component was intentionally rendered unusable when it should be operational, meaning it was not a mechanical failure, said Salazar, the spokesperson. of the commission, in an e-mail.

Hilcorp said in its letter that an investigation revealed that a switch associated with the safety valve system was in bypass mode, which led to the problem.

Hilcorp said the well was “offline” between August 12, when drilling was completed, and September 20, when the well was put on production.

In the order, the three-member commission questioned Hilcorp’s response and said Hilcorp had not provided the agency with enough information.

“Hilcorp’s claim that an internal investigation was carried out is not supported by any details, including a root cause analysis that identifies the cause of the defeated critical well (safety valve system),” the order reads. .

Commissioners Jessie Chmielowski and Dan Seamount signed the order. President Jeremy Price is on personal leave this week, Salazar said.

The agency “also questions the effectiveness of Hilcorp’s use of disciplinary action against those involved in the maintenance (of the safety valve) as a means of preventing a recurrence of this violation, particularly at in light of the corrective actions that Hilcorp said it would implement in response to previous (safety valve system) violations.

“Additionally, Hilcorp has not adequately responded to AOGCC’s request for information on what has been or will be done in the future to prevent its recurrence,” the agency said.

Hilcorp could have faced a larger fine after failing to respond to an initial notice from the agency in early October. But the agency waived the daily fee of $ 2,000 after Hilcorp said it did not receive the initial notice.

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